Words by Nathan Armstrong, TPI and Business Sales Manager
“Everybody has a need for speed and you actually make your product, or service, or services more attractive when you do them fast.” – Brian Tracy (The Psychology of Selling)
We have all seen how tech-focused companies have excelled during the pandemic, as speed of service and automation has become more valuable. Although some normality is finally on the horizon, the ways in which we work, and the on-demand services consumers and business owners expect, are here to stay. The new normal.
The domestic energy market is catching onto this and has seen rapid digitisation, making it easier than ever to switch household energy supplier. So why is the majority of the B2B energy market largely relying on outdated manual processes when time is money in business? And how can B2B energy market participants boost their conversion rates by providing unbeatable speed of service? Easy… By streamlining the sales process.
Sales velocity is a key performance indicator that affects a company’s ability to excel and grow. The less time it takes for prospects to move through the sales cycle, the faster you can close more deals. In fact, sales velocity can give a strong indication to a company’s health and the effectiveness of its sales channels.
So, what is sales velocity?
“Sales velocity is the measurement of how quickly deals move through your pipeline and generate revenue. A sales velocity equation uses four metrics (number of opportunities, average deal value, win rate, and length of sales cycle) to determine an organization’s sales velocity and how much revenue they can expect to generate over a specific time period.” – Hubspot
Together, these metrics can be used to calculate sales velocity to optimise your operations to generate revenue faster.
The formula we use to calculate sales velocity looks like this:
For example, you are a TPI and your sales teams average win rate is 10 percent, you have around 2,000 customers to provide prices to, and your average annualised contract value is £5,000. It typically takes 30 working days to turn a prospect from warm lead to sale. Your sales velocity would be:
SV = (2000 x 0.1 x £5000) / 30
= £625,000 / 30
Your company’s sales velocity would be £20,833.33 per day
To improve a company’s sales velocity, you can do one of two things, ideally both. First… increase everything above the line, and second, decrease the length of the sales process.
According to research by CSO Insights, 27 percent of sales reps state that longer sales cycles are one of the biggest barriers to sales effectiveness. To reduce this variable, we can look for opportunities to streamline the sales process.
So, what can TPIs do?
In the case of TPIs, the easiest and most effective way to reduce the sales cycle is to incorporate on-demand energy market data into the very foundation of the sales cycle. This reduces your reliance on suppliers for gathering relevant supply point information at tender, a common friction point in the TPI world.
API access to the Energy Market Data Hub’s (EMDH) ‘data lake’ cuts the usual 5 – 10 working days required to gather supply point data to a matter of seconds, drastically speeding up the sales process. Factor this into the above equation, and it is clear to see how much of an impact speeding up your sales process can have on your bottom line. Cutting your sales cycle length by 50 percent will double your sales velocity. That means more revenue quicker and with fewer resources. The return on investment is clear from this perspective.
The Energy Market Insights team at ElectraLink has developed two APIs which can be integrated into your sales process to give you instant access to supply point information such as Estimated Annual Consumption (EAC), Half Hourly Data, Meter Technical Information, Current Supplier and more. This allows you to cut the time taken to guide customers through the sales process, taking less of the customers time and, in turn, increasing your company’s sales velocity and monthly revenues. Information on these APIs can be found on the EMDH here.
Nathan’s blog post was first published on LinkedIn.